Taxation 200 Individuals: Comprehensive example (55 Marks) Kerry Smith is a marketing manager for Fashion Designs Lid, a South African company and a registered VAT vendor. She has been working for Fashion Designs Ltd for the last 30 years. She is a South African resident and lives in Rondebosch. Cape Town. Kerry, age 58, is married to Ryan, aged 65, and they have two children aged 22 and 24 . Both are full time students. Kerry and Ryan are married out of community of property. The following information relates to the year of assessment ending 28 February 2021: 1. Kerry received a cash salary of R80 000 per month. She also received a performance bonus of R300 000 and a thirteenth cheque, equivalent to one month's cash salary. 2. Kerry was provided with the exclasive use of a motor vehicle from 1 March 2020. Fashion Designs Lid purchased the car for R842 000 (including VAT) on 1 January 2018, which was the same as its retail market value. The motor vehicle was purchased with a full maintenance plan. The maintenance plan was for 2 years only. Kerry does not contribute towards the maintenance costs but had to pay R. 060 to tenew the motor car's license. All other costs in respect of the motor vehicle are borne by her employer. Kerry travelled a total of 20000 kilometers in this motor vehicle up to 28 February 2021, of which 8500 kilometers were travelled for business purposes as shown by her logbook, and 6000 kilometers travelling from home to her office. 3. A reimbursive entertainment allowance was given to Kerry, as she is required to entertain clients on a regular basis. She was reimbursed for entertaining expenses actually incurred of R8 000 . 4. Kerry is a member of her employer's pension fund. Boeh ber employer and Kerry contribute 7.5% of her cash salary only to a pension fund. She contributed R6 800 per month towards a retirement annuity fund. (Assume Kerry's remuneration for the 2021 year of assessment, correctly calculated, is R1 366334.) 5. She also has the use of a company cell phone, with unlimited minutes. Kerry estimates that she uses her cell phone for 80% business use. The actual cost of the cell phone to the company amounted to R 14600. 6. Kerry is the main member on the family's medical aid seheme. Her husband Ryun and their two children are her dependents on the scheme. She contributes R5 000 per month, and Fashion Design contributes R2 000 per month on her behalf. Kerry paid R32 000 in qualifying medical expenses during the 2021 year of assessment. The medical aid refunded her an amount of R18 000 in respect of the medical expenses that she paid out of ber pocket. 7. From 1 October 2019 , she received the free use of a five-bedroomed eaployer-owned house in Pinelands in Cape Town. The house is owned by Fashion Design. Kerry had to supply her own furniture and pays the monthly water and electricity bill; for the 2021 year of assessment, it amounted to R87 000. Her remuneration proxy is R950 000. 8. Kerry received a subsistence allowance of RS00 per day away from home due to local travel. Kerry spent 10 days away from home on local travel. The subsistence allowance is paid to Kerry to cover the costs of meals and other incidental costs while away from home. Kerry bas kept an accurate record of her meals and incidental costs that she spent while away from home. She also has all related invoices. The total amount of these costs amounted to R4 800 . 9. Fashion Designs Ltd granted each of Kerry's two children a bursary of R25 000. Both her children are studying at university. Only children of employees qualify as beneficiaries of bursaries from Fashion Designs. 10. During December 2020Kerry and her family went on a two-weck holiday to Orlando, America, Kerry could choose some clothes from the Fashion Design's warehouse for her trip. She took clothes with a market value of R6000, and a cost price of R3700, and paid only R500 for it. Fashion Designs paid the rental due for the self-catering cottage they stayed in at Orlando. The normal rate is R8 000 per person for two-weeks, but Fashion Designs booked on a special offer and paid only R6 500 per person. Kerry had to pay for their meals, it amounted to R 15 000. Kerry also borrowed Fashion Design's state of the art camera for the two weeks. The original cost price was R 18000 when it was purchased in January 2019 . and the market value in December 2020 was R16 500. 11. Fashion Design offer a nail and manicure service to the employees for free to ensure their hands always look good. Fashion Design pays R 150 per employee for this service. Kerry made use of the service 8 times during the 2021 year of assessment. 12. Kerry received an annuity of RI 500 a month for the 2021 year of assessment. She purchased the annuity from PSG Investments on 1 June 2020 for R.240 000 for a 20-year period and received the first payment on 30 June 2020. 13. On 30 September 2020, Kerry sold her holiday apartment in Durban for R2 million. She purchased the holiday apartment 10 years ago for R 1.1 million. When she purchased it, she upgraded the bathroom and kitehen at a cost of R300000. She spent R30000 on repairs to the apartment before selling it. She also paid agent's commission of R 100000 on the sale of the apartment. On the same day she also sold ber 12-meter-long yacht for R70 000. Kerry and her husband have purchased it before they had kids for R60 000 and has spent all their weekends and R50000 to get it ready to be used. It was stored close to the holiday apartment. Because it was not used often, it was not in a good condition. 14. On I5 December 2020Kerry sold some gold assets - jewelry that she does not wear anymore for R 18500 (cost price in 2005 was R3 200), and 2 Kruger Rands that she inherited from her grandmother in 2008 for R2140 each (the market value when she inherited it was RI 135 each). Kerry has an assessed capital loss of R 50000 from the 2019 year of assessment. (She did not dispose of any capital assets in the 2020 year of assessment.) 15. She contributed R20 000 on 1 June 2020 towards the SPCA, which is a registered PBO. She received the required certificate for her donation. Required: Calculate the nomal tax liability of Kerry Smith for the year of assessment ended 28 February 2021